Boston-based Forrester Research announced yesterday the acquisition of New York-based JupiterResearch and parent company JUPR Holdings from business development company MCG Capital Corporation for $23 million in cash. According to Forrester executives, the addition of JupiterResearch is intended to enhance the Forrester's existing Marketing and Strategy group.

The acquisition plan was in the works for a while, according to Forrester Chief Operating Officer Charles Rutstein. "It's been going on for some time," Rutstein says. "Deals like this don't just happen overnight."

Jupiter, founded by Josh Harris in 1986 as Jupiter Communications, is no stranger to acquisitions, and has been passed around a significant amount since going public in 1999 under then-CEO Gene De Rose:

2000: Jupiter merges with Media Metrix.

2002: Jupiter Media Metrix is sold to Alan Meckler's INT Media Group for $250,000 and the assumption of certain liabilities; the entire company is renamed Jupitermedia.

2006: Jupitermedia is acquired by MCG Capital Corporation for $10 million; MCG merges the unit with Kagan Research and renames it JupiterKagan until Kagan is sold to SNL Financial in 2007.

Throughout Jupiter's history, Forrester was often viewed as a rival, despite the great disparity in the sizes of the two firms. Writing on Jupiter's corporate blog, JupiterResearch President David Schatsky acknowledged the rivalry: "Jupiter folks have looked at Forrester...with begrudging admiration. We have competed for mindshare, influence, and clients in the arena of Internet business research and strategy. We have not always seen things the same way, and we have scoffed at times at some of Forrester's market forecasts and bold pronouncements on the future. But Forrester has a lot of smart people, and has gotten a lot right. And they have executed their business strategy masterfully."

Schatsky went on in his blogpost to reassure that he is, in fact, "excited" about the two companies coming together: "I know that the expanded, combined organization will have the resources to provide our clients with even greater insight and advice as well as access to Forrester's broad range of products and services."

Third-party analysts have suggested that Forrester is "going on the attack" with mergers and acquisitions (M&A), a fact that Rutstein doesn't deny, pointing out that the process is "aggressive but selective." He adds, "We certainly have a very active M&A screen going. We look at a lot of opportunities, but we're incredibly selective. We're only going to do deals that are accretive and have a good cultural fit, have a good product fit [and] customer fit." The motivation, he says, can be broken down into six key factors:

growth;

people;

new clients;

cross-sell: beyond marketing and strategy, Forrester hopes the acquisition will create opportunities in other sectors of client interests such as technology;

data; and

financial profitability.

Jupiter's 83 employees will complement Forrester's headcount, which was over 1,000 employees prior to the deal. "[The Jupiter analysts] are staying with us," Rutstein says. "As many [of them] as we can convince to stay." The acquisition, he explains, is not about "taking cost out of the system" -- rather, it's an opportunity for the company to grow, develop, and effectively serve the seven roles of its marketing and strategy department:

marketing leadership/chief marketing officer;

interactive marketing;

direct marketing;

customer experience;

consumer product strategy;

e-business and channel strategy; and

consumer market research.

In order to achieve this goal, Rutstein says, "we need as many analysts of their caliber as we can get our hands on."

In terms of clients, while there may be overlap at the corporate level, the number of individual customers utilizing both firms is very small, Rutstein says. The new customers, therefore, increase Forrester's footprint in the market; the Jupiter name will be phased out by the end of the year, Rutstein says.

The two companies have been operating at a different scale: Last year, Jupiter reported approximately $14 million in revenue, compared to Forrester's $212 million. The day before the announcement, Forrester's stock closed at $33.53 a share -- rising to $33.70 on the day of the deal before dropping below the pre-announcement level today ($33.13 at the market's close). The initial rise may have been attributable to Forrester's impressive quarterly earnings; according to a regularly scheduled conference call yesterday, Forrester's second quarter revenue increased 15 percent to $63.5 million from $55.2 million in the year-ago quarter. Overall, the stock is up approximately 20 percent year-to-date.

Moving forward, Rutstein says the expertise of Jupiter will open doors to opportunities that Forrester has yet to tap. While it may be too soon to comment on exactly where the company plans to extend its reach, moves will be made to "create the most-relevant -- the most-effective -- means of serving the seven roles," Rutstein says.

"Watch this space," he advises.

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